Abacus Bank vindicated in new documentary

By Rong Xiaoqing Source:Global Times Published: 2017/5/18 22:13:39

Illustration: Liu Rui/GT

Thunderous applause broke out when the Sung daughters - Vera, Jill and Chanterelle - walked on stage of the IFC movie theatre in downtown Manhattan last week after a preview of a documentary Abacus: Small Enough to Jail. The film, made by Steve James and released on Friday, focuses on the ordeal of the Sung family. The Sung family suffered a painful humiliation after their family business, the Abacus Bank in New York's Chinatown founded by their father Thomas Sung, was charged by prosecutors with committing loan fraud and accused of contributing to the financial crisis in 2008. But now, they are honored as heroes.

They deserve it. After all, the three women, all lawyers, have worked with their father for five grueling years to successfully clear their family name and that of the community bank which mainly serves Chinese immigrants.

Abacus Bank's troubles started in 2009 when loan officer Ken Yu was found to have received kickbacks for falsifying a mortgage application for a client. Yu was later charged and pleaded guilty to grand larceny, fraud, and falsifying business records. But in the post-subprime crisis environment, the investigation soon snowballed and targeted not only Yu but what prosecutors alleged was across-the-board falsification of documents for mortgage applications at Abacus Bank. In 2012, the Manhattan District Attorney's office announced a 184-count indictment against the bank and 11 former employees for operating "a systematic and pervasive mortgage fraud scheme."

Central to the case was the economic peculiarity of the Chinese community, which is dominated by cash transactions and the tradition of supporting one another within a family. As a result, many mortgage applicants at Abacus had sufficient ability to pay back their loans, but were unable to provide the paperwork the system wanted to prove this. The false information on the applications may have helped applicants get mortgages that they would otherwise not qualify for, but it had few negative consequences regarding actual loan performance. The default rate for the mortgages issued by Abacus Bank was less than 0.5 percent compared to the nationwide average of 5 percent when it was sued. Nevertheless, Abacus Bank became the only bank indicted in the aftermath of the 2008 financial crisis.

When the bank was acquitted of all the charges in the summer of 2015, the Sungs' held a ceremony and many community members attended. They praised the Sungs' for standing up to the authorities and saw their win as one for the entire Chinese community. But the pain endures. During the Q&A with the audience after the preview, the Sung's daughters were solemn and, at some moments, tears rolled down Chanterelle's cheeks.

This may seem like a textbook example of what Thomas Jefferson once said about the judiciary system in the US: "I consider [trial by jury] as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution." It is certainly a story of hope and recovery. The faults of the judicial system were exposed when small people were scapegoated for a mess made by those "too big to fail." But even small people can prevail in a judicial system that seeks to treat everyone equally.

But the price for this equality is high. The Sungs' spent $10 million on their defense, an amount most people couldn't hope to earn over the course of their entire lives. So despite their sufferings, the Sungs' were still the lucky ones. When it comes to justice, money often plays a major role.

According to a year-long investigation by National Public Radio in 2014, at least 43 states and the District of Columbia can send the legal bills for public defenders to the defendants who are assigned one. In 44 states, offenders can be charged for their own probation and parole supervision. In addition, in most states offenders have to pay for their probation monitoring devices and the jail facilities. Failing to pay these fees often results in heavier sentences and punishments.

Therefore, even before defendants get to the point where they are raising money for a legal defense, many take a plea deal. This is because a series of policies passed in the 1980s meant defendants who decline a plea deal and then are convicted after going through trials often face heavier punishments. The difference between the two scenarios could be two years in prison versus a life sentence. That's why a 2013 report from Human Rights Watch found 97 percent of federal drug defendants plead guilty.

The chance of defending oneself in front of a jury is a luxury, even without considering the cost.